Gartner Says CIOs Must Assess the Impacts of the Euro Crisis on Their Enterprises Now

<p class='bwalignc'> <i><b>Analysts Highlight Four Broad Challenges That the Euro Crisis Raises, and How CIOs Can Address Those Challenges</b></i> </p>

Monday, December 12, 2011

Gartner Says CIOs Must Assess the Impacts of the Euro Crisis on Their Enterprises Now10:49 EST Monday, December 12, 2011
STAMFORD, Conn. (Business Wire) -- With extreme uncertainty plaguing all enterprises operating in the
eurozone, CIOs must act immediately to protect their enterprises,
according to Gartner, Inc. CIOs need to safeguard their enterprises from
the risks of government/bank default, euro break-up, counterparty
bankruptcy and employee/customer distress.
"Uniquely positioned within their enterprises, CIOs are at the fulcrum
of business and technology, and they are the only executives with
sufficient visibility and potential capability to address the challenges
posed by today's eurozone crisis," said David Furlonger, vice president
and Gartner Fellow. "Business leaders are crying out for CIOs to
demonstrate more effectively the capability of IT and, specifically, to
add value to the business. Therefore, this crisis also presents CIOs
with an opportunity to make substantial and bold steps to meet CEO
demands, and demonstrate the importance and true value of IT."
"Unlike recent economic difficulties, today's crisis has the potential
to totally undermine the eurozone, the whole EU and beyond," said Andrea
Di Maio, vice president and distinguished analyst at Gartner. "Spurred
on by the pervasiveness of the Internet, the crisis negatively affects
every enterprise or individual doing business in or with the region. The
CIO's top responsibility is to guarantee business continuity."
Gartner analysts said there are four broad challenges that the euro
crisis raises, and they examined how the CIO is best positioned to
provide enterprise leadership on addressing those challenges. These
challenges include:
Challenge 1: Market Volatility
Most enterprises and their IT departments are burdened with significant
numbers of bureaucratic processes and latent decision-making mechanisms.
Today's market conditions require business and government executives to
radically restructure their business practices.
"Market conditions require CIOs to help develop a working environment
that promotes speed, agility and adaptability — without sacrificing
accountability," Mr. Di Maio said. "Change management capabilities will
be critical. The foundation to achieve effective change management will
demand information, analytics, HR flexibility and a more decentralized
command-and-control management structure."
Challenge 2: Capital Costs
The costs of and access to capital across Europe will likely continue to
worsen until there is a significant redress in structural imbalances
between countries and organizations. Unwillingness or inability to write
off debt and restructure public- and private-sector balance sheets is a
substantial barrier to market efficiency. Lines of credit will likely
become uncertain or removed, forcing corporations to reduce inventory.
"In this situation, CIOs will face zero-growth budgeting at best, and
substantial reductions in both the investment capital and the
operational budget made available to run the business at worst," Mr.
Furlonger said. "If a market meltdown occurs, then critical resources
and supplies may be at risk. CIOs and other executives must develop
contingency plans to ensure multiple backups."
Challenge 3: Human Capital Management
Millions of people are out of work in Europe. Formal government
austerity packages and informal corporate restrictions on salaries,
benefits and working conditions, combined with high costs of living, are
stressing workforces. This situation is compounded by retirement funding
shortfalls, extensions in the working age and loss of benefits.
"CIOs and business executives face significant HR issues in terms of
rewarding and motivating staff, securing funds to hire appropriate new
talent, and dealing with the personnel hardships of individuals entering
the work environment, which impair productivity," Mr. Di Maio said.
"They must also plan for retention issues of foreign workers moving to
better opportunities or the removal of non-EU work permits and visas in
response to political backlash from rapidly rising unemployment,
resulting in a 'brain drain'."
Challenge 4: Risk Management
The capital markets (and many corporations) believe that the risk of
government and counterparty default is substantial. Receivables
management is being stressed, and the likelihood of internal and
external fraud rises. From an IT standpoint, operational risk is
heightened via issues such as changes in contractual obligations and
business continuity. Added to this is the continued increase in
regulatory compliance initiatives across industries, which exacerbate
the pressure on audit and risk management assessments and workflows.
"Prior to the crisis, enterprises were already challenged to identify
enterprisewide risks in a holistic fashion to link those risks to the
performance of the business and to manage risk in a time-effective
manner," Mr. Furlonger said. "Now, the CIO — and corporate treasurer,
head trader, CFO and others — need to ask questions such as, 'Can
existing risk models accommodate alternatives to the lack of historical
data (in many cases, as much as three years of back data is required)
necessary for regression testing/yield curve analysis of hedges, and for
stressing asset and liability portfolios in the event of a
redenomination in all or part of their asset and liability portfolio?"
More information is available in the Gartner report, "CIOs Should
Address the Impacts of the Euro Crisis on Their Enterprises Now." The
report is on Gartner's website at http://www.gartner.com/resId=1867317.
Mr. Furlonger and Mr. Di Maio will provide additional analysis during
the complimentary Gartner webinar, "Euro Crisis: Plan Now to Minimize
Impact on IT and Business," on January 19, 2012, at 9 a.m. EST and noon
EST. To register for this free webinar, please visit http://my.gartner.com/webinardetail/resId=1870520.
About Gartner
Gartner, Inc. (NYSE: IT) is the world's leading information technology
research and advisory company. Gartner delivers the technology-related
insight necessary for its clients to make the right decisions, every
day. From CIOs and senior IT leaders in corporations and government
agencies, to business leaders in high-tech and telecom enterprises and
professional services firms, to technology investors, Gartner is a
valuable partner to 60,000 clients in 11,500 distinct organizations.
Through the resources of Gartner Research, Gartner Executive Programs,
Gartner Consulting and Gartner Events, Gartner works with every client
to research, analyze and interpret the business of IT within the context
of their individual role. Founded in 1979, Gartner is headquartered in
Stamford, Connecticut, USA, and has 4,500 associates, including 1,250
research analysts and consultants, and clients in 85 countries. For more
information, visit www.gartner.com.
GartnerChristy Pettey, + 1 408 468 8312christy.pettey@gartner.comorLaurence
Goasduff, + 44 (0) 1784 267 195laurence.goasduff@gartner.com

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